Overconfidence is probably the most pervasive behavioural bias anywhere, though anchoring may give it a run for its money. And if you think you are not overconfident, then I encourage you to take the following quiz. Please answer these questions without googling the correct number. No cheating!
Not really. Corporate guidance is manipulated so that the company can beat it, while these forecasts of CFOs are made independently and presumably trflect their honest opinions.
It is also useful here to distinguish CFOs goals and likely realisation. If the CFO is asked about the revenue forecast, the answer may also be his or her goal for it. Not the actual expectation.
Great blog! Are the CFO's forecasts generally in line with corporate guidances? After all, corporate guidance is less often over-optimistic.
Not really. Corporate guidance is manipulated so that the company can beat it, while these forecasts of CFOs are made independently and presumably trflect their honest opinions.
It is also useful here to distinguish CFOs goals and likely realisation. If the CFO is asked about the revenue forecast, the answer may also be his or her goal for it. Not the actual expectation.